The December cash records of Duffy Insurance follow

The December cash records of Duffy Insurance follow:

Duffy’s Cash account shows a balance of $17,050 at December 31. On December 31, Duffy Insurance received the following bank statement:

Additional data for the bank reconciliation follow:

a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.

b. The NSF check was received from a customer.

c. The $1,600 bank collection was for a note receivable.

d. The correct amount of check 1419, for rent expense, is $1,910. Duffys controller mistakenly recorded the check for $1,190.

Requirements

1. Prepare the bank reconciliation of Duffy Insurance at December 31, 2016.

2. Journalize any required entries from the bank reconciliation.

SOLUTION

Requirement 1

BANK			BOOK
Balance, December 31, 2016		$ 18,480	Balance, December 31, 2016		$ 17,050
ADD:			ADD:
Deposit in transit		1,830	EFT collection of rent	$ 400
		20,310	Bank collection of note	1,600	2,000
					19,050
LESS:			LESS:
Outstanding checks			Correction of book error	720
No. 1420	$ 1,470		NSF check	600
No. 1421	1,200		EFT – insurance payment	700
No. 1422	630	3,300	Service charge	20	2,040
Adjusted bank balance, December 31, 2016		$ 17,010	Adjusted book balance, December 31, 2016		$ 17,010

Requirement 2

Date	Accounts and Explanation	Debit	Credit
Dec. 31	Cash	400
	Rent Revenue		400
	To record EFT rent collection.

31	Cash	1,600
	Notes Receivable		1,600
	To record bank collection of notes receivable.

31	Rent Expense	720
	Cash		720
	To record error on check 1419.

31	Accounts Receivable	600
	Cash		600
	To record NSF check.

31	Insurance Expense	700
	Cash		700
	To record EFT insurance payment.

31	Bank Expense	20
	Cash		20
	To record bank service charges incurred.